2014 Recap – Let the Money Metagame Begin

This past year was the first one in which I really started to take my finances seriously. This led to a lot of research on optimizing my money for the present and the future and eventually the creation of this blog. Some of my highlights of 2014 include buying a house, starting to churn credit cards, getting engaged, and starting to set my finances up for financial independence. As a part of getting my finances organized, I tracked almost every dollar I spent during the year (a lot easier than it sounds) which really helped my fiancé and I set a rough budget for ourselves going forward. Hopefully some of you will be able to review some of my real life results of the various things I talk about on this blog and maybe find a few that you can apply to your own lives to stretch your dollars further. Let’s dive into some of the details:

Churning

2014 was the year I learned about churning and the year the entire globe opened up to cheap travel via airline miles and hotel points. As I covered in my Introduction to Churning post, signing up for credit card bonuses can offer huge amounts of airline miles, hotel points, or even cash. After researching the topic over the summer, I applied for my first card in late July and haven’t looked back since. Over the last 5 months of the year, I signed up for 7 credit cards for a total of 205,000 airline miles, 80,000 hotel points, and over $600 in cash just from the sign-up bonuses. My fiancé also signed up for 5 cards of her own for 72,500 flexible points and 150,000 airline miles from the sign-up bonuses alone. All of this for spending money we were going to spend anyway (except for a few hundred dollars in annual fees that weren’t waived the first year) for the small hassle of staying organized and keeping track of all the restrictions and timelines for each card.

The approximate value of all of these miles and points is well over $6,000, and while we can’t just go and cash most of them out (some of them we can!), all of this can be put towards future vacations to essentially eliminate the costs of flights and hotels. We’ve already redeemed some of the miles for 3 round-trip domestic flights and plan to use most of the hotel points later on this year. Additional benefits of these new credit cards include free checked bags, free airport lounge passes, free companion passes, free room upgrades, and Southwest even sent us 4 free drink vouchers for our next flight.

I don’t plan on slowing down in 2015 and will probably sign up for several more credit cards over the course of the year to take advantage of the great sign-up offers. If you have a decent credit score and are responsible with credit, I highly recommend trying out churning for yourself. The benefits can be realized in a very short time frame and can potentially save you thousands per year.

Bank Bonuses

Another useful metagame trick I learned about this year is bank account sign-up bonuses. During Black Friday weekend, Capital One offered $100 bonuses for opening an online checking or savings account. My fiancé and I both opened a checking and savings account for a total of $400 in free money. This was my first introduction to the idea of getting paid to open bank accounts, but I found out it works in a very similar way to churning with a few exceptions. One of the important distinctions is that the bonuses are subject to taxes because unlike credit card bonuses, they count as income instead of “rebates”. Since getting my first banking bonus, I have researched and found several other opportunities with both local and national banks that have similar offers and terms. Doctor of Credit is my favorite resource for finding bonuses for opening new banking accounts.

I plan on utilizing these offers more in 2015 and will rotate around the money I would normally keep in savings as an emergency fund to get risk-free gains from various banks. In the case of an emergency in which I really need the money, it would be easy to withdraw the money and close the account early, probably sacrificing the bonus and maybe having to pay a small fee. This will be especially useful as we save some cash away for a wedding that will probably happen sometime in 2016, because while I would normally invest extra income in index funds, that’s a little too risky for such a short timeline. If you have a thousand dollars or more that you don’t need immediate access too, opening a new bank account or two might not be a bad idea. With the simplicity of doing everything online these days (especially with financial aggregators like Mint being able to track your money across various accounts), it might be possible for you to make a few hundred dollars or more in your free time at home.

Financial Independence

As I researched personal finance, I stumbled across the idea of financial independence, or the ability to support yourself entirely off of your assets instead of being reliant on a job. The idea really resonated with me and I took several steps this year to move our finances in that direction. By maximizing our utilization of retirement accounts such as 401k’s and IRA’s and making a conscious decision to spend a lot less money than we make, we should be able to become financially independent much earlier than the traditional retirement age.

Achieving financial independence isn’t as hard as you might think and doesn’t require any luck or large windfalls to come your way. I highly recommend reading Mr. Money Mustache’s post, The Shockingly Simple Math Behind Early Retirement if financial independence sounds like it might be your thing. He was able to retire in his 30’s with kids and while some of his methods are a little extreme for me, his blog is a great resource for finding ways to save money.

We are currently in the relatively boring phase of working towards financial independence, so we simply try spending less than we make while investing most of what’s left over in broad index funds to watch them grow over time. I look forward to the day our income from investments exceeds our annual expenses and the freedom that comes with that.

Gift Cards

2014 was the year I realized that gift cards aren’t just for gifting. I plan on doing a more in depth post at some point in the future on the potential of gift cards, so I’ll just stick to the basics here. If you’re like me and tend to spend money at many of the same places over the course of a year, there is probably a way for you to save some money by buying gift cards. Whether it’s the grocery store, Home Depot, or your favorite chain restaurant, it’s probably possible to buy gift cards at a discount and just use them instead of a credit card the next time you visit. Gift Card Granny is a great resource to find gift cards selling for 5-30% less than they are worth. Some stores even have deals around gift-giving holidays that allow you to purchase gift cards at a discount.

We purchased $720 worth of gift cards for just under $580 this past year for an average savings of around 20%. The great thing about gift cards is there usually aren’t any restrictions on using them in combination with any number of coupons and cash back deals. Some shopping portals even give you cash back when you check out with a gift card! In 2015, I plan on trying to utilize more of these deals when they line up with our normal spending habits.

Looking Ahead to 2015

I had a lot of fun optimizing our spending in 2014 and look forward to doing even more in 2015. Being able to travel for pennies on the dollar via churning allows us to see the world while still saving lots of money towards financial independence. Maximizing sign-up bonuses and saving every % I can via credit cards, shopping portals, gift cards, and more allows us the freedom to spend more money on the things we want without slowing down our future plans. Here’s a few things I plan to improve on in 2015 to stretch my money even further:

No more spending on debit cards and minimize cash expenses: Even without considering the potential of sign-up bonuses, there is no reason to forego the 2%+ cash back that is easy to obtain by using a credit card instead of the alternatives. Many of my expenses early in 2014 were put on a debit card because I had not yet discovered the potential of credit cards, but in 2015 I will try to put almost every dollar spent on a credit card (paying them in off in full at the end of the month of course).

Try to buy more things online: Aside from groceries, clothing, and large items like furniture (and even those at times), it probably makes more sense for me to buy everything online. By utilizing shopping portals and coupon codes, it is almost always cheaper to buy things online instead of going to the store and you get to save on gas as well. Related to this is remembering to check ebay when I want to buy a new video game or electronics, because it’s often possible to find brand new items cheaper than most places, plus I can use shopping portals, gift cards, and eBay’s own “eBay Bucks” to save even more. I don’t think I’m utilizing eBay to the fullest yet, but I plan to improve going forward.

More Credit Cards and Bank Bonuses: I started utilizing these in 2014 as mentioned above and I plan to continue to do so going forward. I may start focusing more on cash back instead of travel points though depending on the bonuses available because it’s not smart to hoard too many airline miles in case their value goes down in the future. We currently have enough miles for ~15 domestic round-trip flights and it will take well over a year to use them all. Hotel cards are also something that I’ve been pretty light on so far, so I’m looking deeper into those as well. (As seen in this recent post: Hotel Loyalty Program Summary with Current Hotel Credit Card Bonuses)

Travel More while Spending Less: This was my main motivation for getting into churning and this year is when it will really start to pay off. We have already planned out 4 trips this year and may add 1 or 2 more depending on our schedules. We certainly wouldn’t have gone on this many without the help of credit card bonuses, and I expect to travel even more beyond 2015 for even less money.

That just about sums up all the different things I’m doing to optimize my finances, and maybe it’s just me, but organizing and optimizing my money is a lot of fun. I would love to hear what you did in 2014 or plan to do in 2015 to optimize your own finances, so feel free to contact me here or comment below.